Last Update 25 Dec 25

Fair value Increased 0.19%

KHC: Cyclical Headwinds And 2025 Reset Will Support Future Earnings Recovery

Analysts have modestly reduced their blended price target for Kraft Heinz by a few dollars per share to the mid $20s, citing softer organic sales trends, trimmed 2025 guidance, and a still challenging operating environment despite largely cyclical headwinds.

Analyst Commentary

Street research commentary on Kraft Heinz highlights a cautious but not outright negative stance, with price targets edging down into the mid 20s as analysts recalibrate expectations for growth, profitability, and industry conditions.

Bullish Takeaways

Bullish analysts emphasize that the company’s challenges are largely cyclical, suggesting earnings power can normalize once category volumes and promotional intensity stabilize.
Maintaining neutral style ratings alongside reduced targets signals that, at current valuations, downside could be limited if management executes on cost controls and portfolio priorities.
Higher planned investment spending in 2026 is viewed as a potential driver of improved competitiveness and brand health, which could support a re-rating over a longer horizon.
The modest size of the target cuts indicates that analysts still see the earnings base as relatively durable, even after the 2025 guidance reset.

Bearish Takeaways

Bearish analysts argue that the lowered 2025 outlook and recent organic sales miss point to weaker top line momentum, pressuring the valuation until growth visibility improves.
Concerns are rising around deteriorating industry conditions into the fourth quarter, including softer demand and more intense competition, which could cap margin expansion.
The reduction in modeled 2025 EPS, though incremental, reinforces a view that earnings revisions may remain biased downward, limiting multiple expansion in the near term.
With the operating environment expected to remain challenging through year end, some see a risk that execution missteps or slower cost savings could push shares below current target ranges.

What's in the News

Kraft Heinz appointed industry veteran Steve Cahillane as Chief Executive Officer effective January 1, 2026, with outgoing CEO Carlos Abrams Rivera staying on as an advisor through early March to support a smooth leadership transition (Company announcement).
The company lowered its 2025 guidance, now expecting organic net sales to decline 3.0% to 3.5% year over year. This widens the anticipated drop versus its prior outlook and reinforces concerns about top line momentum (Company guidance).
Kraft Heinz recorded a 35 million dollar goodwill impairment in the third quarter of 2025, signaling reassessment of the value of certain acquired assets amid softer performance (Company filing).
Kraft Mac and Cheese launched a major new brand platform, Best Thing Ever, backed by one of its largest media investments and voiced by comedian John Mulaney, to reinforce the brand’s central role in American comfort food culture (Company marketing announcement).
The USDA plans to tap contingency funds to cover partial November SNAP payments, a move that could influence food-at-home demand dynamics for packaged food companies including Kraft Heinz (Reuters).

Valuation Changes

Fair Value: increased slightly from approximately 27.08 dollars to 27.13 dollars per share, reflecting a marginally higher intrinsic valuation.
Discount Rate: effectively unchanged, edging down from about 6.96 percent to 6.96 percent, indicating a stable risk and return assessment.
Revenue Growth: fallen modestly from roughly 0.46 percent to 0.45 percent, signaling slightly lower long term top line growth expectations.
Net Profit Margin: declined marginally from about 12.74 percent to 12.70 percent, pointing to a very small reduction in projected profitability.
Future P/E: risen slightly from around 11.73 times to 11.79 times, implying a modestly higher multiple applied to forward earnings.

Sustained investment in emerging markets, product innovation, and digital initiatives are expanding growth opportunities, market share, and pricing power for Kraft Heinz.
Portfolio optimization and disciplined brand investment are enhancing profitability, operating margins, and long-term earnings stability.
Weak core market performance, eroding margins, lagging innovation, and uncertain strategic moves threaten brand value, revenue growth, and long-term competitiveness.

Catalysts

About Kraft Heinz

Manufactures and markets food and beverage products in North America and internationally.What are the underlying business or industry changes driving this perspective?

Sustained investment in emerging markets, where both volume and margins are expanding at a double-digit rate, positions Kraft Heinz to capitalize on the rapid rise of the global middle class and urbanization, driving top line revenue growth and long-term earnings potential.
Accelerated product innovation and renovations, including health-focused and convenient offerings, are gaining traction and are forecast to comprise a growing percentage of sales, supporting incremental revenue opportunities and premium pricing that can boost net margins over time.
Strategic focus on e-commerce and direct-to-consumer initiatives is yielding improved distribution reach and efficiency, which may lower cost-to-serve and enhance market share, supporting improved operating margins and topline growth.
Ongoing portfolio optimization-divesting non-core brands and reinvesting into high-margin segments and key power brands-should lead to structurally higher operating margins and improved profitability in future periods.
Continued disciplined investment in marketing and the Brand Growth System, especially in North America retail, is already showing performance improvement and is expected to stabilize and eventually reaccelerate top line revenue while maintaining pricing power in an environment of rising consumer price sensitivity.

Kraft Heinz Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Kraft Heinz's revenue will grow by 1.0% annually over the next 3 years.
Analysts assume that profit margins will increase from -20.8% today to 12.5% in 3 years time.
Analysts expect earnings to reach $3.3 billion (and earnings per share of $2.9) by about September 2028, up from $-5.3 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $1.8 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 12.3x on those 2028 earnings, up from -6.0x today. This future PE is lower than the current PE for the US Food industry at 19.5x.
Analysts expect the number of shares outstanding to decline by 2.12% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.

Kraft Heinz Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The $9.3 billion noncash impairment charge triggered by a sustained decline in Kraft Heinz's stock price highlights ongoing challenges in the perceived and carrying value of its intangible assets, signaling long-term risks to brand equity and raising concerns about stagnant or declining revenues and shareholder returns.
Despite ongoing investments and promotional activity, management acknowledged persistent volume declines and cited North America retail as a "gating factor" for overall growth, suggesting weak core market performance may continue to pressure revenues and limit top-line recovery.
The company's response to inflation revealed that pricing growth (around 1%) remains well below input cost inflation (5–7%), and while commodity inflation may ease, stubbornly high pockets like meat and coffee and elevated tariffs (with 100 bps impact rolling to 180 bps next year) threaten to erode net margins and future earnings.
The innovation rate as a percent of sales, while improving from 1.6% to 3%, remains well below peers, indicating that Kraft Heinz's response to consumer demand for health-focused, fresher food and competitive product development continues to lag, risking future relevance and revenue growth.
Uncertainty around potential strategic transactions or business separation raises the risk of dis-synergies, higher costs, and execution risk, rather than guaranteed value creation; such maneuvers may impose further strain on operating margins and cash flows if not managed carefully.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $29.711 for Kraft Heinz based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $51.0, and the most bearish reporting a price target of just $27.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $26.1 billion, earnings will come to $3.3 billion, and it would be trading on a PE ratio of 12.3x, assuming you use a discount rate of 6.8%.
Given the current share price of $26.67, the analyst price target of $29.71 is 10.2% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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